China's solar firms call for trade war over European challenge

China's solar firms warned of a trade war today (26 July) and urged the Chinese government to respond with all means to an anti-dumping complaint filed by European competitors.

Ratcheting up the stakes in ongoing disputes within the industry, companies led by Germany's SolarWorld AG on Wednesday asked the European Union to investigate claims that Chinese firms had been selling their products below market value in Europe - the world's biggest solar market.

"If the EU were to follow the precedent of the US and launch an anti-dumping investigation on Chinese solar products, the Chinese solar industry would suffer a fatal blow," said Wang Yiyu, Yingli Solar's chief strategy officer.

"The investigation would also trigger a wholescale trade war between China and the EU, which would cause huge losses to both parties," he said at a briefing by four major Chinese solar firms - Yingli, SunTech, Trina, and Canadian Solar.

Western solar companies have been at odds with their Chinese counterparts for years, alleging they receive lavish credit lines to offer modules at cheaper prices, while European players struggle to refinance.

Trade action in Europe could prompt China to return fire by taking similar measures against western solar companies.

"We call on the Chinese government to take all necessary and resolute measures to protect the legitimate interests of the Chinese solar industry," Wang said.

Close to 60% of China's solar exports, worth €29.5 billion, were shipped to the EU in 2011, the four Chinese companies said.

The European Commission has 45 days to decide if it will start an investigation.

Not a united front

The SolarWorld-led submission drew protests from large parts of the industry, which have been arguing that a trade war would hurt all parts of the solar sector.

"We hope that the European Commission will recognise that any protectionist measures would harm the entire European solar industry and that a misguided trade war would undermine years of progress," said Jerry Stokes, head of European business at China's Suntech, the world's No.1 maker of solar cells.

The US-based Coalition for Affordable Solar Energy said it was "very disheartened by SolarWorld's unnecessary and destructive actions and urge the EU to reject their petition".

Background

Europe is still the most important market for solar products, accounting for 74% of global installations in 2011, according to industry association EPIA.

It is also the main market for Chinese producers of cells and modules which have been eating away market share vis-à-vis their European peers for years.

In 2011, 57% of all solar cells were produced in China, with Taiwan a distant second at 11%, data by industry publication Photon showed. At close to 7%, Germany - the world's largest solar market by total installations - came third.